Understanding, experience and technology for success
Supplier quality issues like non-conformance management, product recalls and product failures are proving fatal for global organizations. More than ever, companies need to proactively address their supplier quality issues before they can damage businesses operations and cause serious supply chain risks and financial losses; especially when current business conditions are unfavorable. Most companies are already feeling the heat of the current financial meltdown, putting Chief Procurement Officers (CPOs) and their teams under intense pressure to reduce costs and improve cash flow while simultaneously managing an increasingly vulnerable supply base. As recession starts to bite, there is no place left for supply chain disruptions; any discrepancy in supplier quality can significantly reduce company’s revenue, impact market share, increase production cost, threaten brand image and reputation, and lead to high Cost of Poor quality (COPQ). According to a recent AMR survey, almost 67% of the cost of poor quality can be attributed to supplier failure. In an ATS commissioned survey1, the average cost of poor quality calibration costs manufacturers $1,734,000 each year; especially for large companies with revenues of more than $1 billion, the cost inflates to an average of $4,000,000 annually. Organizations can attain systematic reductions in the cost of poor quality by implementing a Quality Management System (QMS) that provides an integrated and closed loop corrective action process.
Supplier Quality Management Measures: Preventing Supply Chain Disruptions
According to AMR, supplier quality plays a critical role attributing to almost 52% of the overall manufacturing performance. In such a scenario, the need to implement streamlined supplier quality management measures can never be over emphasized. Some of the measures employed by leading global manufacturers include:
However, the best way to control quality is to prevent non-conformity at the source. Following this adage, most organizations today are spending a little more time upfront to identify the discrepancies, non-conformances in manufacturing and quality process at the supplier’s site itself.
Site Inspections: Addressing the Causes, Not the Effects
Most organizations today, undertake on-site supplier inspections to compare actual vs. required policy and practice standards. They employ evaluation techniques such as questionnaires, checklists, survey forms and rating systems which generate quality indices and reports on the supplier site itself; allowing them to undertake prompt remedial action if required. Onsite Inspection activities include pre-shipment inspection, random sampling, during- production inspection, and container loading check.
By capturing, analyzing, and assessing quality related issues, site inspections create total transparency and visibility into the supply chain - providing instant traceability and real time monitoring across the supplier network. Its scope includes
Key Benefits of Site Inspections: Benchmarking Supply Quality Standards
From management perspective, site inspections accrue a quantifiable return on investment - fast and just-in-time quality production and reduction of both order cycle times and inventory levels. Few of the tangible rewards are listed below:
Technology Driven Solutions: Getting the Best Out of Site Inspections
Site inspections provide insight and visibility to potential supplier problems so that they can be rectified on time. This helps in ensuring quality procurement, compliance adherence, and costs reduction. Below are the ways by which you can leverage technology to ensure that your site inspections become beneficial in enhancing supplier quality:
Quality issues not discovered and addressed prior to shipment can hurt the bottom line of any organization. World-class manufacturers are realizing the need to maintain a consistent and systematic quality process to gain real time inspections data with analytics of trend analysis. AMR2 reports in 2007 survey that 46% of companies planned to implement supply chain risk management technology in the next 12 to 24 months. Leading organizations are replacing their manual and paper-based systems with technology-driven solutions, like MetricStream (www.metricstream.com), to achieve complete automation of supplier quality management. By improving operational efficiencies in quality systems, automated solutions enables companies to create a transparent environment for proactively identifying, tracking and resolving quality issues. Moreover, the embedded best practices for supporting key processes and requirements for standards and regulations such as ISO 9000 and FDA cGMPs lower the cost of regulatory compliance and risk of noncompliance.